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Amazon Alexa Is All Set To Lose $10 Billion This Year, See Why

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Amazon Alexa Is All Set To Lose $10 Billion This Year, See Why-GadgetAny
Alexa

The Alexa team was apparently the company’s greatest financial loser when it came to layoffs.

Currently, Amazon is undergoing its largest round of layoffs ever, with a goal of eliminating 10,000 positions. The Amazon Alexa voice assistant device, which is reportedly losing favor inside the e-commerce behemoth, is one of the areas that has been impacted the hardest. According to a Business Insider article that describes “the fast demise of the voice assistant and Amazon’s broader hardware division,” this is the case.

Since it has been around for ten years, Alexa has been a trailblazing voice assistant that both Google and Apple have heavily imitated. However, Alexa has never been able to establish a consistent source of income, therefore she doesn’t actually generate any. Business Insider reports that the “Worldwide Digital” department, which includes the Alexa division and Amazon Prime video, lost $3 billion in just the first quarter of 2022, with “the great majority” of the losses attributable to Alexa. According to the article, the hardware division is expected to lose $10 billion this year, which is reportedly twice as much as any other division has lost. It seems like Amazon is sick of wasting all that money.

Amazon is introducing matter to the Alexa platform gradually

A rift that is in crisis

A division in crisis was described by “a dozen current and former personnel on the company’s hardware team,” according to the BI story. Almost every attempt to monetize Alexa has been unsuccessful, and one former employee has referred to Alexa as “a wasted opportunity” and “a tremendous lack of imagination.” The end effect of years of attempting to turn things around is the layoffs this month. When Alexa was allegedly the “pet project” of previous CEO Jeff Bezos, the firm gave her a significant amount of time to develop. In an effort to solve the monetization issue, an all-hands crisis meeting was held in 2019, but it was unsuccessful. Alexa’s recruiting was frozen by the end of 2019 and Bezos began to lose interest in the project around 2020. Of course, Andy Jassy, Amazon’s brand-new CEO, doesn’t seem to care as much about keeping Alexa safe.

According to research, even though Alexa’s Echo line is one of “Amazon’s best-selling items, most of the gadgets sold at cost.” We want to make money when people use our gadgets, not when they buy them, read the business concept in one internal memo.

Alexa

However, that strategy never really took off. It’s not like Alexa plays commercial breaks after you use it, so the idea was for users to utilize their voice to make voice-activated purchases on Amazon. Few individuals are willing to trust an AI with their financial decisions or with purchasing something without first viewing a picture or reading reviews. By year four of the trial, according to the article, “Alexa was getting a billion interactions a week, but the majority of those chats were trivial instructions to play music or ask about the weather.” Those queries cannot be made profitable.

Amazon also tried to work with businesses to develop Alexa skills so that voice commands could, for example, order pizza from Domino’s or call an Uber, and Amazon would receive a commission. According to the study, “by 2020, the team discontinued reporting sales targets due to lack of usage.” Although studies of that idea indicated that the “financial contribution” of those customers “frequently fell short of expectations,” the team also tried to portray Alexa as a halo product with consumers who are more likely to spend at Amazon, even if they aren’t purchasing via voice.

Alexa And Other Voice Gadgets

Jassy said in a memo to staff that the company still had “belief in pursuing” Alexa despite making significant layoffs to the Alexa team. One employee told Business Insider that since hardware isn’t profitable, there is now “no clear mandate for devices” and that there isn’t a compelling reason to keep improving on successful goods. The internally divisive $1,000 Astro robot, which is essentially an Amazon Alexa on wheels, is the result of this lack of direction. According to Business Insider’s tracking, the Google Assistant currently has 81.5 million users in the US, followed by Apple’s Siri with 77.6 million users and Alexa with 71.6 million.

Do voice assistants have a future?

Is the future of voice assistants from Big Tech numbered? Everyone appears to be having difficulty with these. Last month, Google stated essentially the same issues with the Google Assistant business model. All of Google’s attempts to monetize assistants with display ads and business partnerships have failed, and the straightforward voice commands that the majority of users truly want cannot be made profitable. Similar to Amazon, Google responded by reducing resources for the division as a result of the product consuming a lot of server time and being a significant financial loser.

alexa notifications

Apple’s ambitions for smart speakers were more concerned with the bottom line than Google and Amazon’s at-cost pricing war, which affected both companies. Although the $350 pricing of the original HomePod was significantly higher than that of the competition, that was undoubtedly a more viable business strategy. However, the Apple model didn’t catch on with customers, and the first HomePod was discontinued in 2021. Apple isn’t giving up on the notion of a large speaker; a comeback is reportedly in the works. There is still a $99 “small” version circulating. At the very least, Siri can serve as a loss leader for iPhone sales, but Apple is also looking for ways to increase its ongoing ad revenue

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Raulf Hernes

By Raulf Hernes

If you ask me raulf means ALL ABOUT TECH!!

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